The gap between the European Union's pretensions and capacities has never looked so wide. Its stagnant economy and the crisis in Ukraine point to gross failures of leadership. In both cases, Europe's de facto leader -- Germany -- is especially to blame.
Is that unfair? You could argue that these blows to Europe's prosperity and security have come from outside -- that the global recession started in the U.S. and the conflict in Ukraine is all Vladimir Putin's fault. You'd be letting Europe's leaders off too lightly.
The EU's current economic policy is indefensible: The EU has chosen to extend the recession by rejecting available remedies. As far as its foreign and security policy goes, this can barely be said to exist. Europe didn't make Putin the ruthless outlaw he is, but it provoked him while knowing it was unwilling or unable to deal with the consequences.
Germany's input to these mistakes has been disproportionate. It isn't just that the size and strength of Germany's economy have made Berlin the de facto capital of Europe. It's also that the errors are characteristically German -- postwar German, that is. Germany's morbid dread of inflation and what can follow has paralyzed Europe's economic policy; and its overweening desire for commerce with Russia and reluctance to confront threats with force has defanged the EU's security policy.
Don't misunderstand me. Germany's desire to heed the lessons of its modern history is noble. Better this, no doubt, than financial recklessness combined with resurgent militarism. But 70 years after the war it's ashamed of, Germany is still -- how to put this? -- overcompensating.
Fiscal austerity and monetary stringency are imposing huge economic costs and threatening Europe with outright deflation. Germany's pathologically orthodox policymakers have set their faces against fiscal relaxation and resisted the European Central Bank's timid moves to loosen monetary conditions. Quantitative easing of the sort used by the U.S. Federal Reserve is needed to support demand. Europe's suffocating fiscal rules, set down in the Stability and Growth Pact, could be adjusted too, given the will. These initiatives wouldn't be entirely without risk, but fears of a 1920s-style hyperinflation are absurd in current circumstances. They need to be expunged from the discussion.
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